Teck Resources, a prominent Canadian mining company, experienced a decline in its shares as it raised the cost forecast for its flagship copper mine in Chile due to construction delays. Additionally, the company reported weaker-than-expected earnings for the latest quarter.
During morning trading, Teck Resources’ shares were down by 5.4% at C$50.35 in Toronto, resulting in a year-to-date drop of 1.6%. On the New York Stock Exchange, the shares declined by 5.1% to $36.89.
Revised Cost Estimate
Teck Resources announced that its Quebrada Blanca Phase 2 project’s cost estimate is now expected to be between $8.6 billion and $8.8 billion, marking a significant increase from the previous estimate of $8 billion to $8.2 billion.
The company is actively working to mitigate risks and cost pressures caused by construction delays in the molybdenum plant and port offshore facilities. Despite these challenges, Teck Resources anticipates that production for the full year will align with the lower end of its expectations.
Teck Resources views the QB2 project as an integral part of its strategy to transform into a major copper producer and reduce its reliance on steelmaking coal production. The construction of the QB2 molybdenum plant is now projected to be completed by the end of the year, while the port offshore facilities are expected to be finalized in the first quarter of 2024.
Teck Faces Decline in Copper, Molybdenum, and Coal Output for 2023
Teck, a leading mining company, has revised its production targets for copper, molybdenum, and coal for the year 2023. Following challenges at its Highland Valley Copper operation in western Canada, Teck expects a decrease in output across these commodities.
Copper production is now projected to range between 320,000 and 365,000 metric tons, down from the previous target of 330,000 to 375,000 tons. The delay in building the QB2 molybdenum plant has contributed to this decline in copper output. The anticipated copper output at QB2 is expected to be at the lower end of the original target range of 80,000 to 100,000 tons.
Similarly, the delay in constructing the QB2 molybdenum plant has impacted molybdenum production. Teck now forecasts a production range of 3 million to 3.8 million pounds, compared to the previous guidance of 4.5 million to 6.8 million pounds.
Steelmaking Coal Production
Teck has encountered challenges at its plant, leading to a reduction in its annual steelmaking coal production forecast. The company now anticipates producing between 23 million and 23.5 million tons of steelmaking coal, down from the initial target range of 24 million to 26 million tons.
These adjustments in production targets have had several effects on Teck’s financial performance.
Teck’s profit from continuing operations has declined to 276 million Canadian dollars ($201.6 million), equating to C$0.52 per share. This is a significant decrease from the previous year’s profit of C$741 million, or C$1.40 per share.
Furthermore, on an adjusted basis, Teck’s earnings have fallen to C$0.76 per share, which falls short of the analysts’ mean estimate of C$1.06 per share.
Teck’s revenue for the quarter is reported at C$3.6 billion, a 16% decrease compared to expectations of C$3.65 billion.
While Teck faces challenges in meeting its production targets for 2023, the company remains dedicated to overcoming these setbacks and striving for operational excellence in the mining industry.